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Is a demo account really neccassary?

James_Bond
Aug 05 2012 at 07:44
556 posts
What do you think? Nowadays, when you can open an account with as minimal as $1 deposit, does a demo account works for the best interest of the trader or not?

I will clarify; the point of a demo account is to get a feel of forex trading, however it creates the psychological illusion of not caring of any losses/wins and taking enormous risk without having to confront consequences (psychological side).
Short term, a new forex trader won't need to deposit any funds to try trading, however longer term, he/she is most likely to lose his/her first deposit after trading a demo as those are 2 different trading environments.

So why not start with a real account in the first place? A demo account will just make a newbie trader over confident thus causing him to deposit more than what he/she would deposit for testing purposes in the first place. Therefore, I think a demo account is simply disastrous for new traders and is actually achieving the opposite of what it should.

df23333676 (aj901512)
Aug 05 2012 at 08:26
60 posts
i think you got it just right and i agree. demo is quite useless if you plan to trade real money. i say start small with a live account and build your way up.

Abhinav
Aug 05 2012 at 11:23
24 posts
But demo accounts are andavantageous for experimenting new skills or strategies. We can test new strategies without risking money.

James_Bond
Aug 05 2012 at 14:19
556 posts

Abhinav posted:
But demo accounts are andavantageous for experimenting new skills or strategies. We can test new strategies without risking money.


Let me correct myself - it is indeed good for testing new strategies, however what I meant is using it for a long time by newbie traders, getting them to lose grip from the real world.

James_Bond
Aug 06 2012 at 06:58
556 posts
I would add that a demo account is good for estimating a trading idea's possibility, however it fails to measure: slippage, execution and real pricing (spreads) which can have an enormous impact on a trading system.

TheLastBear
Aug 06 2012 at 09:01
186 posts
I prefer PaxForex No Deposit Bonus. You get $200, and the money you make you may keep and it may be transferred to your real account. It makes much more sense to me and you don't waste your time.

Pax puts the X in Forex.
Abhinav
Aug 06 2012 at 09:46
24 posts

TheLastBear posted:
I prefer PaxForex No Deposit Bonus. You get $200, and the money you make you may keep and it may be transferred to your real account. It makes much more sense to me and you don't waste your time.

Yes, I agree with you. No deposit bonus are good for newbies. I am too using one.

Rosie Webster (rosie4x)
Aug 06 2012 at 10:19
11 posts
Demo Accounts are an absolutely necessity for new traders, when I opened my first one last year, I lost $5000 lol obviously I was still learning and still am actually, I hate to think how much I would have lost had I gone in feet first.


Tate
btate91
Aug 15 2012 at 09:06
32 posts
I have traded both a Live and Demo account. I feel like I managed to get a better grasp of my system through using a demo account. I understand that the feeds are not the same, however it helped me develop my ideas. I never thought of it as a quick money making scheme nor did I take huge risks with the demo account, I treated it as if it was real money which I believe is what most people do wrong.

James_Bond
Aug 15 2012 at 12:55
556 posts
btate91 posted:
I treated it as if it was real money which I believe is what most people do wrong.


I think that's exactly the problem! People starting to trade with a demo account cannot treat it as a real account simply because they have never experienced with a real account.

All in all, a demo is very useful as long as you know it's just that - a demo.

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